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Too many cooks can spoil the broth and this is certainly proving to be the case with the regulatory farce in the European Union.

The weekend negotiations ahead of tomorrow’s political meeting between European finance ministers are just the latest in about four years of efforts to decide how much and how to regulate the private equity and broader alternative investments industry.

The pendulum initially was in favour of those within the industry arguing less is more, as the European Commission thought so too under previous internal market commissioner Charlie McCreevy.

Since the credit crisis struck and the egregious greed of financial services employees across the board was revealed, it became politically easier to do something about so-called asset strippers – hedge funds and private equity firms that represented to many the essence and unacceptable face of capitalism. An industry that had preferred the shadows for obvious reasons (who wants to encourage more competition or have their enormous earnings revealed unless they have to?) was caught on the back foot.

The fundamental problem with the proposed directive, as Private Equity News has previously warned, is the lack of clear goals or understanding of the nature of what is being targeted.

Hedge funds are not an asset class, they are a trading strategy investing short or long a market, sometimes using leverage, and based on actual assets or their derivatives. Private equity is a subset of equities outside of public markets. It is hard to target either hedge funds or private equity, or more rarefied alternative strategies, without affecting the underlying assets or a broader swathe of business.

Regulation designed by bureaucrats to appease the whims of a political class will always struggle to cope at the best of times, but when the goals are unclear the task is even harder. What is the point of the European Commission’s Alternative Investment Fund Managers Directive? Reduce systemic risk? Pander to voters’ concerns over banks? Provide work for bureaucrats? Certainly not to help investors whose views are routinely ignored throughout this issue.

Richard Wilson, chairman of the European Private Equity and Venture Capital Association, is right to call for more support from investors to their political representatives, and the letter from the Institutional Limited Partners Association, put on www.penews.com last week, is an important fillip.

For the rest of financial services, the more attention on alternatives the better – the bigger risks from over-the-counter derivatives, rating agencies or banks, and insurers’ recklessness can then be crowded out.

Without a clear goal, or one that is designed to help those the politicians and regulators are meant to help – taxpayers and citizens – an unnecessary burden will be placed on global finance and doing business in Europe. Autocratic states outside liberal western democracies will benefit in the short term but will eventually bring their own problems.

The staggering failings and inefficiencies of the EU are apparent in this crisis. The longer-term and more fundamental problems with autocratic states, where popular representation is bypassed, are no panacea. Helping politicians find a way back to their core duties and responsibilities is the ultimate goal and the industry should be more fearful of cutting off its nose to spite its face by giving up or moving away.

Helping politicians find a compromise text by accepting regulation, cutting excessesa and accepting their responsibilities to society will be beneficial. In this light, the industry should also be more public in naming and excluding those breaking the spirit of the laws, such as those who were reluctant to sign up to the UK’s Walker reforms. Failure to put its own house in order created the conditions for the current farrago.

• Separately, congratulations to Jean-Yves Charlier, chief executive of teaching equipment supplier Promethean, for setting its price in its planned UK flotation. Winner of the BVCA CEO Award last year, held with Private Equity News, Promethean’s success is a testament to entrepreneurialism and hard work allied to global vision. An inspiration for others to follow.